Better Training - the Critical Jobs Issue

FOR much of this century the United States economy provided well-paying jobs for less-skilled workers. Particularly in the 1950s and 1960s, the gap between blue- and white-collar wages was relatively narrow. But in recent years international trade and technology have seriously hurt America's blue-collar middle class, and the gap in income between high school and college graduates has widened dramatically.

Although many US firms have tried to compete by keeping wages low and not investing in their workers, most experts believe that is a losing strategy in an increasingly global economy. For an advanced country such as ours, the only sustainable advantage is a talented and adaptive work force capable of using the latest technologies and reaching ever-higher levels of productivity. Top priority must be given to improving the skills of our workers.

Certainly several other steps are needed too. For starters, Congress and the president must address some basic problems in the overall economy. We need to reduce the enormous federal budget deficit and raise the level of national savings. Those actions will bring down long-term interest rates and in turn encourage firms to invest in plant and equipment. In addition, we need to attack the problem of skyrocketing health costs, which is a major deterrent to job creation. We should ensure that foreign market s are open to our products, tighten up on illegal immigration of unskilled workers, keep down burdensome taxes on business, and cut back unnecessary regulations and federal mandates. Policymakers can also help our industries by making the R&D tax credit permanent, shifting more federal dollars from defense research to civilian, and expanding "manufacturing extension" programs, which help small- to mid-size firms adopt the latest technology.

But there is a growing realization that the skills of American workers are becoming our key competitive weapon in making the transition to an economy with more good jobs, better able to compete globally. What can industry and government do to improve the skills of our workers?

American corporations have been quick to blame the K-12 education system for their workers' lack of preparation, and there is some truth in that. Our elementary and secondary schools need to do a better job of equipping students with strong math, science, and general problem-solving skills.

The difficulty is not so much that our schools and students have declined, but that much of the rest of the world has surpassed us - particularly with respect to the performance of the bottom half of the population. American public schools, even in their heyday, tended to neglect less-talented students. By contrast, the strength of the K-12 education system in many Asian and European countries is its ability to pull up the bottom half.

Central as education is, corporate management is equally important in determining how good a given group of workers will be. American workers, when called upon, have generally measured up. But too often their employers have not given them the responsibility or training necessary to be highly productive.

New forms of work organization, often pioneered abroad, push responsibility and authority downward from line managers and staff engineers to shop floor workers. The goal is to get workers to think continually about how their job can be done better; to be more flexible, so they can take on more than one job; and to care about the quality of their work.

High-performance workplaces require highly trained workers. Yet American firms generally invest less in worker training than firms abroad, and what they do invest is concentrated on professional and managerial workers. Autoworkers in Japan get more than three times as much training each year as workers in US plants managed by GM, Ford, or Chrysler.

If industry underinvests in training, so does the US government. For every $1 in federal funds spent on the post-secondary education of a noncollege bound student, $55 is spent subsidizing one going to college.

American firms are reluctant to provide worker training largely because they fear that employees will leave for better jobs, and the firm will lose its investment. Japanese companies, with their system of lifetime employment, don't face that problem.

A possible solution is for government to require firms to spend a specified amount on worker training. For example, France mandates that firms spend 1 percent of sales on employee training or else put that amount into a government fund to finance public training programs. Alternatively, the federal government might grant tax credits to firms that invest in training. A more ambitious proposal would set up a training account for every American, funded through payroll tax deductions. Individuals could draw on this fund to pay for university training or as reimbursment for on-the-job training.

The prime responsibility for workplace organization and training rests with the private sector. But industry on its own typically invests less in workplace skills than is desirable from the standpoint of the overall society. Thus government has a role in bringing about a higher level of investment. There are many ways to accomplish this. But executives and politicians alike first need to acknowledge that America's ability to compete in the 21st century will depend, above all, on the talents of its worker s.